What are National Insurance classes?
Workers make contributions to National Insurance in different ways depending on how they are employed and what they earn. These categories are known as 'classes.'
In the table below, we explain the different National Insurance classes, including who needs to pay what in 2021-22, and how payment is collected.
|Who pays these?||How are they collected?|
|Class 1||Employees earning more than £184 per week and under state pension age||PAYE|
|Class 1 A or B||Employers pay these on employee benefits or expenses||Paid to HMRC|
|Class 2||Self-employed people with profits of more than £6,515 a year||Paid through self-assessment|
|Class 3||Voluntary contributions made by those with gaps in their National Insurance contributions history||Paid to HMRC via form CF83|
|Class 4||Self-employed people with profits of more than £9,568 a year (in addition to Class 2)||Paid through self-assessment|
From April 2022, class 1 and class 4 will increase by 1.25 percentage points as the government will introduce an additional health and social care levy to existing National Insurance payments.
From 2023, the levy will also be paid by those workers who are above the state pension age; currently, they don't pay National Insurance at all.
National Insurance contributions for employees
Employees and most agency workers make Class 1 contributions, collected via PAYE together with their income tax.
In 2021-22 you pay 12% on earnings between £9,568 and £50,270, and 2% on anything more.
In 2020-21, you paid 12% on earnings between £9,500 and £50,000, and 2% on anything more.
From 2022-23 you will pay 13.25% on earnings between £9,568 and £50,270, and 3.25% on anything more.
But because NI is calculated monthly (if you're paid monthly), you could end up paying more on irregular income such as bonuses.
On top of this, employers also make contributions on their workers' income, generally of 13.8% (rising to 15.05% from April 2022) of earnings above £702 per month.
Find out more: National Insurance rates - what you'll be charged in 2021-22.
Self-employed National Insurance contributions
If you're self-employed, you'll often pay Class 2 National Insurance contributions and Class 4 NICs as well.
In 2021-22 you pay Class 2 contributions if you earn more than £6,515, charged at £3.05 a week.
Class 4 contributions come in on profits above £9,568 at 9%, falling to 2% on earnings above £50,270.
From April 2022, class 4 contributions will come in on profits above £9,568 at 10.25%, falling to 3.25% on earnings above £50,270.
In 2020-21 you owed Class 2 contributions if you earned more than £6,475, which cost £3.05 a week.
Class 4 contributions were payable at 9% on profits above £9,500, falling to 2% on earnings above £50,000.
Voluntary Class 3 contributions
Class 3 National Insurance contributions are those that you can pay voluntarily. You may opt to do this if you have gaps in your record from previous years.
These cost you £15.40 per week in 2021-22, up from £15.30 per week in 2020-21.
Student National Insurance contributions
You don't start paying National Insurance until you're over 16-years-old. Students who are older than this are not exempt. If they earn enough, they pay like any other worker.
If students don't do paid work, they are not credited with NICs for the years they are studying.
This creates a 'gap' in their contributions record, though most will still work for enough years after qualifying to merit a full state pension.
Low-earners and National Insurance
You don't have to pay National Insurance if you earn below a certain amount. In 2021-22 this is £9,568 for employed workers; in 2020-21 it was £9,500.
But you should consider making voluntary Class 3 contributions, as extensive gaps in your record may deprive you of some benefits.
Find out more: National Insurance and benefits - which benefits are linked to each type of contributions?
National Insurance credits
There can be gaps in your contributions record if you don't pay National Insurance but, in many circumstances, you'll be 'credited' with contributions by HMRC.
National Insurance credits can help you qualify for certain contributory benefits, such as basic state pension, and payments if you're unemployed or unable to work due to illness.
To find out more, read our guide to National Insurance credits for a detailed explanation of who is entitled to them
National Insurance in retirement
Currently, workers no longer have to pay National Insurance upon reaching the state pension age (currently around 65), even if you carry on working. This is set to change from 2023, due to a new health and social care levy of 1.25 percentage points, which will begin to be rolled out to workers from April 2022.
Once you reach this age, there may be steps you can take to top-up your state pension, if you haven't reached the full 35 years' contributions to earn the maximum.
Find out more: how do I qualify for state pension? – the criteria you need to meet